Justia White Collar Crime Opinion Summaries

The United States Commodity Futures Trading Commission (CTFC) and the Oklahoma Department of Securities brought suit against multiple corporate defendants (including Prestige Ventures Corporation) and several individuals, Kenneth Lee and his wife and two sons, Simon Yang. The Lees and Mr. Yang appealed pro se a district court's order entered in favor of CTFC. In their complaint, the CTFC alleged that defendants operated a Ponzi scheme that bilked at least 140 investors out of millions of dollars, in violation of a number of provisions of the Commodity Exchange Act and the Oklahoma Uniform Securities Act of 2004. Plaintiffs also alleged that millions of dollars were funneled to Defendants from Prestige by Mr. Lee, in cash and in the form of houses, cars, and boats. The court authorized a receiver to take possession of and sell the houses and boats. further, the court entered a broad array of permanent injunctive orders prohibiting defendants from further dealings in commodity futures and transacting investment-related business in Oklahoma. The court further ordered Defendants to pay over $5 million in restitution and a number of penalties, and ordered Defendants to disgorge large sums of cash. Each of the Lees filed a substantively identical motion for reconsideration of the Order. Having considered these issues and having reviewed the briefs, the record,and the applicable law in light of the applicable review standards, the Tenth Circuit affirmed the judgment of the district court for substantially the reasons stated in the district court’s order of summary judgment and its Order. View "CFTC, et al v. Lee, et al" on Justia Law

Defendant, former Majority Leader of the New York State Senate, appealed his conviction for honest services mail fraud, arising from defendant's failure to disclose conflicts of interest related to his receipt of substantial payments from individuals seeking to do business with the State. While defendant's appeal was pending, the Supreme Court decided United States v. Skilling, and held that 18 U.S.C. 346, the honest services statute, criminalized only fraudulent schemes effectuated through bribes or kickbacks and did not criminalize mere failures to disclose conflicts of interest. At issue was whether defendant could be retried under the standard announced in Skilling on certain counts. Although the court held that Skilling required the court to vacate the convictions on Counts Four and Eight, because the court's review of the record convinced it that the government adduced sufficient evidence under the Skilling standard, double jeopardy did not bar retrial on those two counts. The court also held that double jeopardy did not bar retrial on Count Three because, regardless of the sufficiency of the evidence, the Double Jeopardy Clause did not preclude a retrial on a charge that resulted in a hung jury. Accordingly, the court vacated the counts of conviction and remanded for further proceedings. View "United States v. Bruno" on Justia Law

In 2003, the Securities and Exchange Commission (SEC) sought a preliminary injunction against ClearOne Communications, Inc. based on suspicions of irregular accounting practices and securities law violations. During a hearing on the preliminary injunction, Defendant and former CEO Susie Strohm was asked if she was involved in a particular sale by ClearOne that was the focus of the SEC’s case. She said she was not and approximated that she learned of the sale either before or after the end of ClearOne’s fiscal year. Based on this testimony, Defendant was later convicted of one count of perjury. She argued on appeal to the Tenth Circuit that her conviction should be reversed because (1) the questioning at issue was ambiguous, (2) her testimony was literally true, and (3) even if false, her testimony was not material to the court’s decision to grant the preliminary injunction. The Tenth Circuit disagreed on all three points. The Court found the questions were not ambiguous and there was sufficient evidence to demonstrate Defendant knowingly made false statements. Also, Defendant's testimony was material to the preliminary injunction hearing because it related to a transaction the SEC believed demonstrated ClearOne’s accounting irregularities. The Court therefore affirmed Defendant's conviction. View "United States v. Strohm" on Justia Law

Plaintiffs brought this action against several defendants alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 28 U.S.C. 1961 et seq., and raising several state law causes of action. The district court granted defendants' motion to dismiss the RICO claim and declined to exercise supplemental jurisdiction over the state law claims. The district court denied plaintiffs' subsequent motions to reconsider and to amend their complaint. Plaintiffs appealed. The court agreed with the district court that plaintiffs failed to plead the RICO elements of an enterprise, a pattern of racketeering activity, and at least two predicate acts committed by each defendant. The court found no error in the district court's denial of the motion to amend and could not say that the district court abused its discretion in dismissing the state law claims. View "Crest Construction II, et al. v. Doe, et al." on Justia Law

Defendant Maurice Ragland was sentenced to 168 months in prison for his role in a mortgage fraud operation. He challenged his sentence as substantively unreasonable. From January 2002 to January 2004, Defendant participated in a mortgage fraud conspiracy through an appraisal business called TERM Appraisers. Defendant's role in the conspiracy consisted of providing fraudulent appraisals that manipulated values of comparable properties and falsely attributed features to homes being appraised. In addition to the false appraisals, TERM associates stole the identities of licensed appraisers and forged their signatures and license numbers on appraisals. TERM associates also created false identities and license numbers for nonexistent appraisers and used those identities to prepare the fraudulent appraisals. At sentencing, the court imposed a 16-level enhancement for a loss between $1 million and $2.5 million, and determined the proper Guidelines range to be 151 to 188 months' imprisonment. Defendant sought a variance, arguing that the Guidelines calculations did not reflect his allegedly minor role in the conspiracy. The district court refused his request, concluding that Defendant played a critical role in the conspiracy because the inflated appraisals were essential to the fraudulent mortgage loans. Upon review, the Tenth Circuit found that Defendant's perception that he should have received a shorter sentence did not rebut the presumption that his sentence was substantively reasonable. Accordingly, the Court concluded that the district court did not abuse its discretion in calculating Defendant's sentence. View "United States v. Ragland" on Justia Law

Defendant appealed from a judgment convicting him of (1) conspiracy to violate the Iranian Transaction Regulations (ITR) and operate an unlicensed money-transmitting business; (2) violating the ITR; (3) operating an unlicensed money-transmitting business; and (4) two counts of making false statements in response to government subpoenas. On appeal, defendant argued that the district court erred in several respects when instructing the jury on the conspiracy, ITR, and money-transmitting counts; defendant was entitled to a new trial on the false statement counts because the government constructively amended the indictment; the government committed misconduct in its rebuttal summation, which he claimed necessitated a new trial on all counts; and defendant should be resentenced because the district court miscalculated the applicable offense level. The court reversed Count One to the extent it alleged a violation of the ITR as an overt act and vacated and remanded to the extent it was based on the money-transmission violation as an overt act; reversed Count Two; vacated and remanded Count Three; and affirmed Counts Four and Five. View "United States v. Banki" on Justia Law

Defendant Peter Bernegger and his co-defendant were charged in a six-count indictment with various counts of mail fraud, wire fraud, bank fraud, and conspiracy for inducing investors to invest money in two start-up companies based on several misrepresentations. Bernegger was convicted of mail and bank fraud and was sentenced to seventy months in prison and ordered to pay restitution of approximately $2 million. The Fifth Circuit affirmed as modified, holding (1) the district court did not err in refusing to sever the bank fraud count from the mail and wire fraud counts; (2) the district court did not violate the Sixth Amendment or abuse its discretion in denying Bernegger the opportunity to cross-examine a witness about an alleged discrepancy in Bernegger's testimony; (3) the district court did not plainly err by not declaring a mistrial sua sponte based on the format of the indictment; (4) there was sufficient evidence to support the jury's verdict finding Berneggar guilty of mail fraud; and (5) because the district court clearly erred in calculating the total loss amount, the restitution amount was incorrect and was therefore modified to reflect the correct total loss amount of $1,725,000. View "United States v. Bernegger " on Justia Law

This case centered around the political corruption of former California Congressman Randall "Duke" Cunningham, who provided lucrative government defense contracts to defendant and others in exchange for expensive meals, lavish trips, a houseboat in Washington D.C., and mortgage payments for his multi-million dollar home. Defendant appealed his convictions on multiple counts of conspiracy, honest services wire fraud, bribery, and money laundering. The court held that, under its holding in United States v. Straub, the district court's determination that it was not authorized to compel use immunity for a defense witness absent a finding of prosecutorial misconduct was erroneous. Because the district court concluded that the proffered testimony would "counter" the testimony presented by the prosecution through immunized government witnesses, and the government did not challenge that finding as clearly erroneous, the court remanded the matter to the district court with instructions to conduct an evidentiary hearing to determine whether compelled use immunity regarding the proposed testimony was constitutionally required. The court affirmed the district court's judgment of conviction in all other respects. View "United States v. Wilkes, et al." on Justia Law

Defendant appealed her jury conviction for one count of conspiracy, one count of bank fraud, and thirteen counts of loan fraud. On appeal, defendant contended that the district court committed prejudicial error by admitting two summary charts under Federal Rule of Evidence 1006; there was insufficient evidence to support each of her convictions; and the district court erred in ordering her to pay restitution in the full amount of the victim lenders' loss, despite a prior civil settlement with the victim lenders that included a release from liability. The court held that the charts were properly admitted under Rule 1006, 404(b), and 403. The court also held that the evidence at trial was sufficient for a rational jury to convict defendant of the crimes for which she was charged. The court held, however, that under the current restitution order, the victim lenders would receive more than their actual losses and therefore, the imposition of the order was plain error. Accordingly, defendant's convictions were affirmed and the restitution order vacated and remanded with instructions. View "United States v. Rizk" on Justia Law

Defendant was prohibited from possessing a computer or accessing the internet while on home confinement, after being released from prison following a 2005 plea of guilty to wire, mail, and bank fraud. He nonetheless used the internet for a check-kiting scheme and, in 2010, was charged under 18 U.S.C. 1344 (bank fraud), 18 U.S.C. 1341 (mail fraud) and with escape. He was found guilty and sentenced to concurrent terms of 80 months, followed by supervised release with limits on internet and computer use. The First Circuit affirmed, first holding that a jury could reasonably infer that the banks were FDIC-insured at the time of the offenses and that defendant used the mail as part of his schemes. The special conditions imposed on release are reasonably related to the goals of supervised release. The calculation of loss, including a fraudulent $1.4 million check that did not result in any actual loss, was not clear error. View "United States v. Stergio" on Justia Law